The Nifty50 seems to be in a bull phase as the uptrend extended for the seventh consecutive session, taking the index above the 15,600-mark for the first time on May 31.
Metals, banking & financials, pharma and FMCG stocks helped the market close at a record high. The index formed a bullish candle on the daily charts as the closing was higher than the opening level. Experts expect the Nifty to face resistance around 15,750 in the coming sessions.
"Technically, it formed a strong bullish candle on the daily scale and continued its formation of higher highs of the last seven sessions. Now, it has to hold above 15,500 levels to witness an upmove towards a fresh life-time high of 15,750," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
India VIX, which measures volatility in the market, dropped further to 16.88 levels, down 2.96 percent from 17.40 levels on May 28, the lowest in 65 weeks. "Falling VIX is likely to extend the bullish market momentum towards new high territory," Taparia said.
The Nifty started off on a flat note at 15,437.75 and hit an intraday low of 15,374 but the gained strength to hit the day's high of 15,606.35 in late trade. The index rallied 147.10 points, or 0.95, percent to close at 15,582.80.
"The Nifty50 appears to have attracted buying interest as it dipped into the bullish gap zone of 15,394–15,384 levels registered on May 28, which resulted in a robust bullish candle. Moreover, seventh consecutive positive close from the lows of 14,884 is hinting that fresh leg of upswing is in progress," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
A breakout from the 50-day old descending channel on May 18 had opened up a higher target placed around 15,850 levels on the Nifty. However, evolving line studies are projecting teh near-term hurdle at around 15,720. Hence, as the Nifty is trading in uncharted territories, traders can go with a target zone of 15,750 – 15,850, Mohammad said.
It is critical for the index to sustain above 15,374 to retain positive bias because if it closes lower, it can be seen as an initial sign of weakness, he said. Till then, intraday dips can be an opportunity to create fresh longs but with a stop below 15,374 on a closing basis.
The options data indicated that the Nifty could see a trading range of 15,000 to 16,000 for the coming sessions.
On the options front, maximum Put open interest is at 14,000 followed by 14,500 strike, while maximum Call open interest is at 16,000 followed by 16,500 strike. Call writing is at 16,200 then 16,300 strike, while meaningful Put writing is at 15,000 then 14,800 strike.
The Bank Nifty opened slightly negative at 35,097.45 and after touching a low of 34,930, it recovered and crossed the previous day's high.
Banking stocks managed to push the index above 35,500, its highest daily close of the last 51 sessions with gains of 385.30 points, or 1.1 percent, at 35,526.70.
The Bank Nifty formed a Bullish Engulfing candle on the daily scale. It has been forming higher highs from the last three sessions. It has to hold above 35,250 to witness an upmove towards 36,000 and 36,250, while on the downside, support is seen at 35,000 and 34,750," said Taparia.
On the stock front, "bullish setup was seen in SAIL, Muthoot Finance, JSW Steel, Indraprastha Gas, ICICI Bank, LIC Housing Finance, Siemens, Reliance Industries, Container Corporation, Dabur, Motherson Sumi, Mindtree, Biocon, Godrej Consumer Products, Pidilite Industries, Cipla, Maruti and Lupin. Weakness was seen in Shriram Transport Finance, Aurobindo Pharma, Ashok Leyland and TVS Motor, he added.Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust of which Reliance Industries is the sole beneficiary.